FanDuel: An $11 Billion Company

Friends,

Flutter Entertainment, a bookmaking holding company which houses brands like Betfair, Paddy Power, Sky Bet, and FoxBet, announced yesterday that they will be acquiring an additional 37.2% of FanDuel for $4.18 billion.

The deal will increase Flutter’s ownership stake to ~95% and values the leading US sports gambling operator at more than $11 billion.

Here are the details (Source):

• Flutter originally invested in FanDuel in 2018, purchasing a 57.8% stake at a $558 million valuation.

• The deal gave Flutter an ability to purchase the remaining equity percentage of FanDuel through two additional transactions.

• Rather than wait, Flutter sped up that timeline — acquiring another 37.2% of FanDuel for $4.18 billion yesterday.

• Flutter will pay ~$2 billion in cash and fund the rest by issuing 11.7 million consideration shares to early private equity investors.

• Once the deal closes, Flutter will own 95% of the $11.22 billion gambling company.

From an equity return perspective, investors took well to the announcement.

Flutter, whose equity is traded on the London Stock Exchange, saw their stock price jump over 13% initially — settling on a 8.5% gain by market close.

In 2020, Flutter’s stock is up over 55%.

Outside of the financial details, the agreement seems to be an obvious one for Flutter.

Not only did they see their original investment balloon in value, from a $558 million valuation in 2018 to an $11.22 billion valuation in 2020, but now they are able to double down and aggressively expand their bet on an obvious winner in the US sports gambling market.

The part that no one is talking about?

Boyd Interactive Gaming, who acquired 5% of FanDuel through a strategic partnership in 2018.

As part of the deal, FanDuel opened eight retail locations at Boyd properties in states like Iowa, Indiana, Mississippi, and Pennsylvania.

In return, Boyd is able to leverage FanDuel’s technology stack to operate their own online sports betting skin separate from FanDuel in various states — paying up through a revenue share agreement.

The interesting part?

The ~$28 million in FanDuel equity that Boyd acquired through the partnership agreement in 2018 is now worth about $561 million.

🤯🤯🤯

Obviously amazing, but it really just further proves the point — sports gambling is only getting bigger.

Hope everyone has a great weekend and we’ll talk next week.

Extra Credit

ICYMI — today’s extra credit is a thread I put together last night.

I won’t spoil the story, but if you’re from Canada, a fan of the NHL, or just enjoy a good entrepreneurial story, than this one is for you.

Enjoy!

This Newsletter Is Brought To You By…

Don’t sacrifice your ability to be healthy, active, and at your best to enjoy a great beer - Athletic Brewing has created an innovative lineup of refreshing, non-alcoholic craft beers. At Athletic Brewing, they're all about re-imagining beer for the modern adult.

With Athletic beers, you can have the full relaxing ritual of drinking a great beer to wind down the day, with your dinner, or day drinking, without derailing the rest of your day or week.

Looking for a great beer for Sunday through Thursday nights? Athletic's got you covered.

Give them a try - use “JOE25” for 25% off your first order at athleticbrewing.com.